Why bother with public life?

Speech given at the opening dinner of Consilium, hosted by the Centre for Independent Studies, in Coolum, Queensland

Ladies and Gentlemen:

Greg has suggested that tonight I try to answer the question "Why bother with public life?" And I'm delighted to do that, because it's a question I often ask myself!

As we all know, lots of people live in the public eye - sports heroes, Hollywood actors, TV newsreaders, high profile politicians. All of them are susceptible to various kinds of abuse and denigration - if you think it's only politicians who are subject to abuse, ask how Graham Henry feels after the loss of two games against the Springboks last week!

But tonight I'm talking about why anybody would consciously choose to go into public life, in the sense of seeking some kind of involvement in public policy-making.

My own involvement in public life has been of three kinds.

First, I've been a member of umpteen advisory boards and committees - the Monetary and Economic Council, the Committee of Inquiry into Inflation Accounting, and the Planning Council in the seventies; I chaired the four committees which recommended the extensive reform of the New Zealand tax system, and was a member of the Market Development Board, in the eighties; and in the nineties I was a member of the committee which recommended that we not establish a permanent body to monitor the insurance industry but instead rely on a mandatory rating system.

Second, I've been, for 14 years, the Governor of the Reserve Bank.

And third, I've been a Member of Parliament, and Leader of the Opposition.

In all three roles, I've attracted a degree of critical media attention, though the nature of that attention varied greatly.

As a member of an advisory board, I sometimes attracted disagreement, very occasionally strong disagreement, but it was rarely personal.

As Governor of the central bank, I often attracted intense disagreement and hostility, whether I was tightening monetary policy or easing it: perhaps surprisingly, I used to get more letters of complaint when I was cutting interest rates than when I was raising them, no doubt because those with savings in the bank typically have more time to write letters (or perhaps are more literate!) than big borrowers. But even in that role, while people often thought I was seriously misguided, very few people questioned my integrity.

But of course in politics, one invites the full wrath of at least half the population - and often much more! And people question your integrity, and your motives, and often your parentage!

Apart altogether from the abuse, public life certainly has plenty of frustrations, as many people in this room know only too well.

For starters, we live in countries which practise democracy, a system of government which Churchill once called the worst form of government, with the exception of all the alternatives. It's a system of government which invites the majority to exploit the minority - a system where governments have learnt that robbing Peter to pay Paul guarantees them the support of Paul; a system where taking $25,000 from one person and giving $5,000 to five others almost guarantees the government a net four votes.

I don't know enough about Australian history to know whether it was true in this country, but in New Zealand there was little political support in Parliament for a progressive income tax (under which the affluent pay not only more tax than the indigent, but proportionately much more as well) until the advent of universal suffrage. As Paul Goldsmith notes in his excellent history of taxation in New Zealand, the first New Zealand election which adopted the principle of one man one vote in 1890 (women were not to get the vote until three years later) saw the victory of the Liberal Party, "which promised tax cuts for most people but also saw a new, progressive tax that would extract more money from a small, wealthy minority".1

And thus it's been ever since, with the result that in most democratic countries a small minority of citizens pay the overwhelming majority of the tax.

Is this fair? Does it lead to policies which would enhance the well-being of all citizens? Almost certainly not, but it's the reality, curbed only by the freedom which the more affluent have to move to friendlier climes abroad.

We see the same factor driving government spending. During the 2005 election campaign in New Zealand, the Labour Government announced that, if re-elected, they would waive interest on all student debt. They justified the move on the grounds that it would encourage students to remain in New Zealand rather than going abroad. It was always an absurd argument - only 6% of the student loans outstanding at the time were owed by people who were outside New Zealand. But it had enormous political appeal, and absurd and damaging though the move was, the present Government seems certain to leave the policy in place. There are just too many people who would be angered by any move to a more sensible policy. Now, those who want taxpayers to provide totally free tertiary education are lamenting the huge increase in student debt - as if an increase in student debt after it becomes interest-free should be a surprise. Anybody too stupid to realise that they should take as much interest-free money as they're offered is too stupid to be at a tertiary institution!

If it were not for the virtually inevitable tendency for undemocratic states to degenerate into corrupt kleptocracies, those who genuinely want to see our societies have more freedom and more prosperity would favour a move away from a system of government which gives as much political voice to somebody who can't even name the current Prime Minister as it does to, well, us!

I also find the media a source of intense frustration, and I suspect that most others holding public office have the same sense of frustration. And I'm not just talking political bias, though there's plenty of that, but rather the sheer superficiality of so much of the media, particularly of the television variety.

In New Zealand, we have two state-owned free-to-air TV channels and for superficiality they're very hard to beat.

A few months ago, the new Government introduced legislation to allow some employers the right to dismiss new employees within a 90 day probationary period. It was very timid legislation, restricting that right to companies with fewer than 20 employees. It was, among other things, a way of helping those on the margins of the workforce get into employment - recently-arrived migrants, those with relatively poor education, those who've served time in prison, those with health issues and so on. But how did the state-owned TV channel handle it on the news? As an attack on those on the margins of the workforce. They showed an interview with an autistic man who lamented that he had found it very hard to get employment before this legislation came along, and would now find it even harder. Nobody challenged this patently ridiculous claim, and the Government was made to look uncaring and callous.

More recently, the new Government canned an extremely expensive tunnel option for extending a major highway in Auckland - a tunnel widely seen as proposed by the last Government only because the highway ran through Helen Clark's electorate. And who did the state-owned TV channel interview for a reaction to this proposal? A nine-year-old child, concerned that the alternative route proposed for the highway might affect his school grounds!

Personally, I'm in favour of having a state-owned television network - provided it is in some meaningful way different from the commercial TV networks and that it provides balanced and in-depth news coverage. What we have now is for the most part appalling crap - where Michael Jackson's death is lead item on the main news bulletin for days on end, but where the result of the presidential election in Indonesia - the only predominantly Muslim democracy in the world, and a country of huge potential importance both to your country and to mine - gets no mention at all.

And then there's the frustration of what at least appears like politically motivated behaviour by the organs of state which are supposed to be politically neutral.

In New Zealand, the police refused to prosecute a Labour Party Minister for physical abuse of children, refused to prosecute the Labour Party Prime Minister for forging a painting and, much more serious, refused to prosecute the Labour Party for a flagrant abuse of the electoral spending laws in 2005.

But they did prosecute a National MP for driving a tractor up the steps of Parliament in a case which the court threw out as being entirely without merit, and failed to take any serious steps to investigate a major breach of security around the office of the Leader of the Opposition.

(For the benefit of the Australians in the room, a left-wing activist published a book based around the theft of nearly 500 emails written to or by me and my close advisers over a two year period - plus other stolen material - and nine months after I lodged a formal complaint with the police about this, the police had failed to interview any of the most obvious suspects. When I asked when on earth they were going to do that, they explained that they couldn't conduct the interviews in the near future because of the APEC Leaders meeting - in Sydney three months later!)

One of the toughest things about public life is the moral dilemma around truth-telling.

Early last month, Bagehot argued in The Economist that lying "is an automatic, necessary, sometimes virtuous skill. For politicians it is an essential one." 2 I don't want to accept that view, but I can see why it's a widespread view of politicians. I can even see why Bagehot may be right.

I can't ever recall telling a lie in politics, but I was extraordinarily lucky: I came into politics with a sufficiently strong reputation that I could sometimes get away with taking a view which was slightly different from my Party's view.

One of the huge differences I noticed between being Governor of the Reserve Bank and being a politician is the difference between being somebody who could call the shots as I saw them and being part of a team where decisions are made by consensus.

Every Governor of a central bank has enormous influence over the monetary policy decisions made by that central bank. In New Zealand, all monetary policy decisions are made by the Governor alone. Of course, if he's wise the Governor will listen carefully to the views of his senior colleagues, and of board members. But ultimately, the decisions are made by the Governor. He is able to say exactly what his best judgement tells him to say.

How different it is in politics - at least in countries like yours and mine, with relatively rigid party systems, where members of the caucus are expected to defend a decision reached by the caucus even if they personally disagree with it.

And of course, that's even more true of Ministers of the Crown: they are expected to strongly defend decisions made by the Cabinet, irrespective of their personal views. Sometimes they're forced to attack decisions made by a previous Government of which they were a senior Minister.

Is it any wonder that many people see politicians as dishonest?

I well recall debating in the late eighties with a group of sanctimonious types who were incensed that the government of the day had reduced entitlements to the taxpayer-funded retirement scheme by imposing a surcharge on it, despite having promised not to do so before the election. I asked them two questions. First, could the government have been elected if they had admitted their intention to reduce the entitlement before the election? Second, could the country afford not to reduce the entitlement in the long-term? They answered "no" to both questions, and I pointed out that perhaps they were saying that the government therefore had a moral obligation to lie - not a conclusion I felt at all comfortable with.

Of course, the Governor of a central bank with a pegged currency is expected to lie about whether the currency will be devalued, no matter how much planning for that eventuality is going on within the central bank. It is in the national interest that he does so.

At the moment, I understand there are a number of members in the National Party caucus in New Zealand who are highly dubious about claims that human activity is causing significant global warming. In the relatively rigid party system which we have in New Zealand, and I suspect you have in Australia, they dare not admit that publicly. They are forced to lie - or at very least to obfuscate.

There are serious dangers in hiding your true opinions. When I was Leader of the Opposition, a friend sent me some words of wisdom. He said that, when you're on your way up in political life, you're always tempted to hide your true principles, or your views on important issues, lest by expressing them openly you lose critical support from those whose support you may need. You put them, he said, like roses in a box - you cover them up to bring them out when you reach the position of influence to which you aspire. Alas, when you achieve that position and open the box, the roses are dead.

I look back on a discussion in caucus before I became Leader, early in 2003, when we were discussing what position the National Party should take on supporting our traditional allies who were about to go to war in Iraq. I'm as pro-American as any New Zealander I've ever met, but I thought the idea of invading Iraq when we had absolutely no proof that they had weapons of mass destruction was nuts. The overwhelming majority of the caucus thought that we should go wherever our allies went. I said nothing.

As Martin Luther King once said, "our lives begin to end the day we become silent about things that matter."

In due course, I paid a price for my silence in caucus. After I became Leader a few months later, I felt I had no choice other than to continue the policy of support for US action in Iraq, and was branded a lackey of the US - a reputation which may well have cost me the 2005 election.

So why do people bother about public life?

It may be hard for most of you to believe, but I believe that, even in countries where politics is largely free from corruption, like Australia and New Zealand, some do it for money. Certainly, for some back-benchers and for many ministers, their total remuneration - taking into account the non-salary benefits - significantly exceeds what they could earn outside Parliament.

And of course in some countries political power provides plenty of scope for personal enrichment through awarding contracts, or selling import licences or access to foreign exchange.

Some undoubtedly do it for the public profile, or for the sense of self-importance which political life can engender. Yes, there are brick-bats, hostile cartoons, and always the risk of serious reputational disaster, but much of the time in politics one is most closely surrounded by people who tell you what a great guy you are, what a great job you are doing, how crucial to the country's future you are - and after a time, you actually begin to believe it!

But I suspect that, at least when people first go into politics, they're motivated by the very highest ideals - to serve their fellow citizens, to help their country, perhaps even to help the world. I haven't done a proper survey, but I suspect that a disproportionate number of politicians come from a strongly religious upbringing. It's interesting to me that Gordon Brown is the child of a clergyman, as in New Zealand are Jenny Shipley, Richard Prebble and I. All of us would have been brought up to serve others and to love our neighbours as we love ourselves, and I have little doubt that that motivation played a crucial part for all of us going into public life.

And of course public life can be incredibly satisfying.

I look back with huge satisfaction at chairing the committee which designed the New Zealand Goods and Services Tax, widely regarded as one of the best of its type in the world; at eliminating the persistently high inflation which had dogged New Zealand for two decades; at pioneering an internationally unique relationship between government and central bank; at developing a new approach to banking supervision; at improving the efficiency of the central bank, so that staffing could be reduced from 550 to 180; at changing, at least to some degree, the nature of the political debate around race in New Zealand; at helping to lift the National Party's share of the vote from its lowest ever in 2002 to its highest level since 1990 in 2005.

Public life is where you have at least the chance to influence the broad sweep of policy - and improve the lives of all the citizenry.

Do I have regrets? Of course I do!

But actions speak louder than words: that I still believe that taking a chance on public life is eminently worthwhile is amply demonstrated by the fact that I've just agreed to take on the chairmanship of what we're calling the 2025 Taskforce, charged with recommending ways in which New Zealand can catch up with Australian living standards by 2025.